A state panel on decentralization urged the central government Thursday to transfer more authority to local governments to secure their own tax revenues.
In its final report submitted to Prime Minister Junichiro Koizumi, the Committee for the Promotion of Decentralization said such a shift in tax authority is "indispensable" to achieve the structural reforms the government seeks.
The panel acknowledged the need to maintain, to some extent, the tax grant system under which the central government reallocates its tax revenues as subsidies to local governments. The system is necessary for its function of adjusting gaps in tax revenues among different municipalities, the report says.